In the basic EOQ model,if annual demand doubles,the effect on the EOQ is that:
A)it doubles.
B)it is four times its previous amount.
C)it is half its previous amount.
D)it is about 70 percent of its previous amount.
E)it increases by about 40 percent.

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is $\sqrt{\frac{2DS}{H}}$, where $D$ is the demand rate, $S$ is the order cost, and $H$ is the holding cost per unit per year. If the annual demand ($D$) doubles, the EOQ increases by the square root of 2, which is approximately 1.41 or 41%, hence an increase of about 40 percent.

In the Basic EOQ Model,if Annual Demand Doubles,the Effect on the EOQ